When we think about entrepreneurship in the U.S., high profile Silicon Valley tech startups like Google, Facebook, Dropbox or Uber typically come to mind. No other ecosystem comes close to attracting so much venture capital and creating so many high-paying jobs.
Many other regions have spent the last two decades trying to find ways to replicate their model. This is the reason many economic development organizations (EDOs), incubators, accelerators, angel funds, etc., focus their time and resources on startup ventures.
The logic is solid, young companies are generating virtually all net-new job growth in the U.S. Without startups and the entrepreneurs that drive them, achieving long-term economic growth seems impossible.
Another group needs attention
All this attention on high-profile tech startups racing toward an IPO seems to have obscured a different, more low profile group of high-potential ventures that also need nurturing.
As any successful entrepreneur will tell you, the journey from idea to exit is a long one. Entrepreneurship is fraught with growing pains, and the long fight through “the valley of death” only leads to a new kind of problem on the other side — scalability.
If startups are the economic newborns, then these “scaleup” ventures are the adolescents. They may or may not be technology companies, but either way, all scaleups share one key characteristic: an untapped potential for rapid growth and job creation.
Most companies in the scaleup phase have surpassed cash flow breakeven and are modestly profitable. Most scaleups, however, still confront the same types of fundamental business challenges that plague startups — capital, sales and talent.
To get to the next level of growth, most scaleups will need capital to build staff and infrastructure. With growth comes the need to add staff and the demand to find talent to help address the many new operational challenges that come along with growth. And of course, the need to grow revenue is perpetual.
While some of these young businesses may be “stuck” at a revenue plateau, they have a huge advantage over startups. They already have a customer base that validates their business model. If they can identify and overcome their particular bottleneck, these scaleups have the potential to grow (and hire) aggressively.
While organizations have sprung up in the last decade to assist early-stage startups, few of them focus on helping scaleups achieve their true potential.
JumpStart has begun a program to assist high-potential scaleups in Northeast Ohio in their efforts to raise capital, grow sales and attract, recruit and retain key talent.
The road to success extends far beyond the startup stage. For the ecosystem to truly thrive, we must also begin looking for ways to unlock the full economic potential of our local scaleup companies. These businesses may not have generated the media attention of Silicon Valley-style startups, but they are poised to rapidly create jobs and economic impact.
And with the right help at the right time, they might just start generating some high-profile headlines of their own.